Chaplin, et al v. NationsCredit Corp, et al

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 01-11389
_______________
VERONICA CHAPLIN, THOMAS HALL, FRANK ILLING,
STEPHEN KENDALL, GERHARD LEVERING,
JOHN DAVID THRONEBERRY,
AS AN INDEPENDENT EXECUTOR OF THE ESTATE OF RALPH THRONEBERRY,
SUBSTITUTED IN PLACE AND STEAD OF RALPH THRONEBERRY, DECEASED,
AND
STEPHEN BUCK,
Plaintiffs-Appellants,
VERSUS
NATIONSCREDIT CORPORATION AND BANK OF AMERICA,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________
October 8, 2002

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Before SMITH and BENAVIDES, Circuit
Judges, and FITZWATER,* District Judge.
JERRY E. SMITH, Circuit Judge:
The plaintiffs appeal a summary judgment
adverse to their claim for employee benefits.
Finding no error, we affirm.
I.
Plaintiffs Veronica Chaplin, Thomas Hall,
Frank Illing, Stephen Kendall, Gerhard Lever-
ing, Ralph Throneberry,1 and Stephen Buck
worked as executives or managers at Nations-
Credit Distribution Finance (“NCDF”) until
early 1998, when they lost their jobs because
of a corporate reorganization. NationsCredit
Corporation (“NationsCredit”) and NCDF
were subsidiaries of NationsBank Corporation;
Bank of America is the successor to
NationsBank Corporation.
NationsCredit established a severance pay
plan in 1995 under the Employee Retirement
Income Security Act of 1974 (“ERISA”), 11
U.S.C. § 1001 et seq. The plan granted
severance benefits to “those full-time salaried
employees in Salary Grades below Band C
who are designated in writing by the
Company’s Director of Human Resources as
eligible to participate in the Plan due to
involuntary termination of his/her employment
as a result of position elimination, position
restructuring, lack of work, and/or the like.”
Plaintiffs and NationsCredit dispute whether
plaintiffs were eligible employees under the
Plan in early 1998 when they lost their jobs
because of the reorganization.
Neither side disputes that plaintiffs earned
salaries below Band C and were involuntarily
terminated. They disagree only whether plain-
tiffs were “designated in writing by the
Company’s Director of Human Resources as
eligible to participate in the Plan.” Plaintiffs
contend they were designated as eligible
employees by a memorandum dated September
25, 1995, with an attached copy of the
summary plan description, and by a
memorandum dated February 29, 1996, with
an attached copy of an amendment to the
summary plan description. NationsCredit
responds that these documents do not
designate plaintiffs as eligible employees and,
in any event, NationsCredit terminated the
plan in 1997 before plaintiffs became eligible.
Although they claimed eligibility under the
plan, each plaintiff signed a Letter of Agree-
ment between March 1998 and September
1998 releasing NationsCredit from all potential
claims in exchange for severance benefits
under non-ERISA guidelines adopted in Jan-
uary 1998 during the reorganization. A
section of the Letter of Agreement entitled
“Release of Claims” included the following
language:
[Y]ou hereby agree to release NCDF
from any and all claims, suits, demands,
or other causes of action of any kind . . .
arising at any time in the unlimited past
up to and including the date of your ex-
ecution of this Letter of Agreement.
This release includes any claims based in
tort, contract or alleged violation of any
federal, state or municipal statute, or
ordinance. It includes, but is not limited
to, all claims arising by reason of or in
* District Judge of the Northern District of
Texas, sitting by designation.
1 Ralph Throneberry died after plaintiffs sued.
His son, John Throneberry, has been substituted as
the executor of his estate.

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any way connected with your
employment relationship with NCDF . .
. .
. . .
. . . You also acknowledge that any
payment(s) made to you under the terms
of this agreement are in addition to any-
thing you are already legally entitled to
receive from NCDF.
The severance benefits plaintiffs received in
exchange for signing the release were less than
they would have received under the plan if the
plan was active in early 1998 and if plaintiffs in
fact were eligible for benefits under the plan.
II.
Notwithstanding this release, plaintiffs sub-
mitted claims for severance benefits under the
plan to NationsCredit in January 1999.2 Na-
tionsCredit denied the claims in March 1999,
because plaintiffs had released it from all lia-
bility. Plaintiffs then appealed the denial to the
plan administrator in April 1999. The
administrator denied the appeal in September
1999. Plaintiffs then filed the instant action,
making claims under ERISA and state law for
wrongful denial of severance benefits offered
in the plan and wrongful denial of their appeal
to the administrator.3
NationsCredit moved for summary
judgment on all of plaintiffs’ claims, which the
district court ultimately granted, but only after
a motion to reconsider and a second
memorandum opinion. In the first opinion, the
court denied summary judgment on the ERISA
claims and granted summary judgment on the
state law claims.
First, the court found a genuine issue of
material fact regarding plaintiffs’ eligibility for
the plan when they were terminated. Second,
the court held that the releases did not bar suit
because the releases were limited to “anything
[plaintiffs] are already legally entitled to re-
ceive from NCDF,” which could include sev-
erance benefits offered in the plan if plaintiffs
proved at trial that they were in fact eligible
employees when they were terminated. Third,
the court found a genuine issue of material fact
as to whether the plan administrator had
denied plaintiffs’ appeal for benefits in an
arbitrary and capricious manner, because the
court already had concluded that plaintiffs
might have been eligible for benefits under the
plan and that the releases did not bar the suit.
Finally, the court held that ERISA’s
preemption clause, 29 U.S.C. § 1144(a),
preempted plaintiffs’ state law claims, and
accordingly it granted summary judgment to
NationsCredit on these claims.4
After a motion to reconsider, however, the
court granted in whole NationsCredit’s motion
for summary judgment in a second opinion.
The court did not disturb its earlier finding that
plaintiffs “were potentially entitled to receive
benefits under the 1995 plan.” The court
concluded, however, that it had committed a
2 Appellant Buck did not submit a claim for
benefits.
3 NationsCredit also filed a counterclaim
against plaintiffs for breach of contract, but the
counterclaim is not before us on appeal.
4 Plaintiffs alleged state common law claims of
fraudulent inducement, unilateral contract, unjust
enrichment, detrimental reliance, breach of fidu-
ciary duty, equitable estoppel, mental anguish, and
intentional and grossly negligent infliction of
emotional distress.

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clear error of law by holding that the releases
would not bar plaintiffs’ suit because plaintiffs
and NationsCredit disputed plaintiffs’
eligibility for the plan. Thus, even if plaintiffs
had sued and ultimately prevailed on their
underlying claim of eligibility for the plan,
plaintiffs were not “already legally entitled to”
severance benefits under the plan.
The district court therefore granted
summary judgment to NationsCredit because
the releases barred plaintiffs’ suit. For the
same reason, the court also concluded that the
plan administrator could not have acted in an
arbitrary and capricious manner, and therefore
it granted summary judgment to NationsCredit
on this claim as well. The court did not
disturb its earlier holding that ERISA
preempted plaintiffs’ state law claims.
Plaintiffs appeal the summary judgment on
their claims for wrongful denial of benefits and
wrongful denial of their appeal by the plan
administrator.
III.
We review a summary judgment de novo
and apply the same standards as did the district
court. TIG Ins. Co. v. Sedgwick James, 276
F.3d 754, 759 (5th Cir. 2002). Summary
judgment is appropriate only if “the pleadings,
depositions, answers to interrogatories, and
admissions on file, together with the affidavits,
if any,” when viewed in the light most fa-
vorable to the non-moving party, “show that
there is no genuine issue as to any material
fact.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249-50 (1986). A dispute about a
material fact is “genuine” if the evidence
would permit a reasonable jury to return a
verdict for the non-moving party. Id. at 248.
The court must draw all reasonable
inferences in favor of the non-moving party.
Id. at 255. To obtain summary judgment, “if
the movant bears the burden of proof on an
issue . . . because . . . as a defendant he is
asserting an affirmative defense, he must
establish beyond peradventure all of the
essential elements of the . . . defense to
warrant judgment in his favor.” Fontenot v.
Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.
1986).
IV.
NationsCredit bears the burden to prove
that the releases bar plaintiffs’ suit; it must es-
tablish that plaintiffs “signed a release that ad-
dresses the claims at issue, received adequate
consideration, and breached the release.”
Williams v. Phillips Petroleum Co., 23 F.3d
930, 935 (5th Cir. 1994). Neither side
disputes that plaintiffs signed the releases or
that, if the releases cover plaintiffs’ claims for
ERISA benefits and they received adequate
consideration, they breached the release by su-
ing. The parties disagree on, first, whether the
releases cover plaintiffs’ claims for ERISA
benefits and, second, whether plaintiffs
received adequate consideration for the
releases. We agree with the district court that
the releases cover plaintiffs’ ERISA claims and
that the plaintiffs received adequate
consideration.
A.
The parties disagree whether the language
of the releases covers a claim for ERISA ben-
efits. Plaintiffs contend that for a release to
cover an ERISA claim, it must specifically
mention ERISA. NationsCredit argues that a
release need not specifically mention ERISA
for its broad language to cover an ERISA
claim.
We agree with NationsCredit that the lang-
uage in the release sweeps widely enough to

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cover plaintiffs’ ERISA claim. Federal com-
mon law controls the interpretation of a re-
lease of federal claims. Fulgence v. J. Ray
McDermott & Co., 662 F.2d 1207, 1209 (5th
Cir. 1981). The terms of the releases
unambiguously reveal an intent to cover every
imaginable cause of action: “[Plaintiffs]
hereby agree to release NCDF from any and
all claims, suits, demands, or other causes of
action of any kind . . . arising at any time in
the unlimited past . . . [including] all claims
arising by reason of or in any way connected
with [plaintiffs’] employment relationship
with NCDF. . . .” (Emphasis added.)
Although we have not expressly decided
whether this kind of any-and-all language cov-
ers a claim for ERISA benefits, the reasoning
of Williams strongly suggests that it does.5 In
Williams, the plaintiffs signed releases with
similar any-and-all language. We held that the
releases covered claims under the Worker Ad-
justment and Retraining Notification Act
(“WARN”), 29 U.S.C. § 2101 et seq., even
though the releases did not specifically
mention WARN. Williams, 23 F.3d at 936.
We explained that “[t]here is no obligation un-
der WARN or the common law for the
defendants to mention WARN for the releases
to be valid.” Id.
Moreover, we cited two cases holding that
this kind of any-and-all language covers a
claim for ERISA benefits. Id. (citing Fair v.
Int’l Flavors & Fragrances, Inc., 905 F.2d
1114, 1117 (7th Cir. 1990); Franz v. Iolab,
Inc., 801 F. Supp. 1537, 1543 (E.D. La.
1992)). Finally, plaintiffs cite no section of
ERISA or any caselaw to suggest, much less
to require, that, to cover an ERISA claim, a
release must specifically mention ERISA.
The policy behind our holding in Williams
also suggests that a release with sweeping any-
and-all language should cover an ERISA
claim, even if the release does not specifically
mention ERISA. “Public policy favors
voluntary settlement of claims and
enforcement of releases.” Williams, 23 F.3d at
935.6 It would be an odd public policy that
favored settlements and releases, but then
forced employers to scour the United States
Code and the state statutes and reports to
identify every possible cause of action.
Such a rule would add needless transaction
costs to settlements. Higher transaction costs,
in turn, would discourage settlement in close
cases by making settlement comparatively less
attractive to the expected value of success on
the merits.
These transaction costs could well be se-
vere and widespread. Granted, frequent
visitors to our courts might be indifferent to a
rule requiring that releases specifically mention
all possible causes of action. Their able
lawyers could draft interminable releases for
repeated use and thus consolidate and reduce
the costs across cases. Yet, most litigants are,
happily, not frequent visitors to the courts, and
they lack the resources to obtain, in advance,
5 Plaintiffs intimate that Williams is not good
law after Oubre v. Entergy Operations, Inc., 522
U.S. 422 (1998). As we explain below, see infra
Part IV.C, the holding in Oubre is extremely lim-
ited and in no way undermines the holding or the
reasoning in Williams.
6 A release of an employment or employment
discrimination claim is valid only if it is “knowing”
and “voluntary.” Alexander v. Gardner-Denver
Co., 415 U.S. 36, 52 n.15 (1974). Plaintiffs do not
argue that they signed the releases under duress or
otherwise without knowledge or involuntarily.

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punctilious release language for every possible
situationSSeven if they were on notice that
they might need it. Moreover, even repeat
litigants would place a lower value on
settlements in general, because the contin-
gencySShowever slightSSwould remain that
they would miss a possible cause of action.
This unknowable contingency will always
reduce the expected value of settlement and
will further discourage settlement. In contrast,
a rule allowing litigants to settle all claims with
a plain and simple statement that the release
covers any and all claims reduces transaction
costs, puts sophisticated and unsophisticated
litigants alike on equal footing, and adds
certainty to settlement negotiations and
agreements. The kind of sweeping any-and-all
language contained in these releases not only
promotes swift , inexpensive, and
comprehensive settlement of all disputes, but
also adequately notifies plaintiffs that they are
releasing all possible claims.
In short, a general release of “any and all”
claims applies to all possible causes of action,
unless a statute specifically and expressly re-
quires a release to mention the statute for the
release to bar a cause of action under the stat-
ute. ERISA contains no such requirements.
The releases therefore cover plaintiffs’ claims
for ERISA benefits.
B.
The only remaining question under
Williams is whether plaintiffs received
adequate consideration for the releases. We
conclude that they did.
The adequacy of the consideration depends
on plaintiffs’ eligibility for the plan. A clause
in the releases appears to limit the scope of the
releases if plaintiffs were eligible for the plan.
“[Plaintiffs] also acknowledge that any
payment(s) made to [plaintiffs] under the terms
of this agreement are in addition to anything
you are already legally entitled to receive
from NCDF.” If plaintiffs were “already
legally entitled to receive” severance benefits
under the plan, then the smaller severance
package they received in exchange for the
releases cannot be adequate consideration.
The parties, naturally enough, dispute plain-
tiffs’ eligibility. The plan covered “those full-
time salaried employees in Salary Grades
below Band C who are designated in writing
by the Company’s Director of Human
Resources as eligible to participate in the plan
due to involuntary termination of his/her em-
ployment as a result of position elimination,
position restructuring, lack of work, and/or the
like.” The parties do not disagree that
plaintiffs earned salaries below Band C and
were involuntarily terminated. They contest
only whether plaintiffs were “designated in
writing by the Company’s Director of Human
Resources as eligible to participate in the
plan.”
Plaintiffs contend that the memoranda of
September 25, 1995, and February 29, 1996,
designated plaintiffs as eligible employees.
NationsCredit denies this assertion and
contends that plaintiffs could be designated as
eligible employees only when they lost their
jobs, by which time NationsCredit already had
terminated the plan. As the district court
found in its first opinion and did not reconsider
in its second, these arguments raise a genuine
issue of material fact that cannot be resolved
on summary judgment.
Perhaps plaintiffs would have proven their
eligibility for the plan if they had not signed the
releases and instead had taken their underlying
ERISA claims to trial; but perhaps not. That

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is a story whose ending we shall never know,
because plaintiffs signed the releases. By
doing so, they surrendered their disputed right
to a larger payment for a certain right to a
smaller payment, which is to say, they received
adequate consideration for the releases.
The district court correctly held, on
reconsideration, that O’Hare v. Global
Natural Res., Inc., 898 F.2d 1015, 1016 (5th
Cir. 1990), compels this result.7 In O’Hare,
the plaintiff’s employment contract entitled
him to benefits if fired without cause, but no
benefits if fired with cause. Id. at 1016. The
employer fired plaintiff with alleged cause, but
plaintiff disputed the alleged cause. Id. The
plaintiff, however, signed a release of all
claims in exchange for some benefits, though
less than he would have received if he had
been fired without cause. Id. Plaintiff then
sued for alleged age discrimination and for the
benefits he would have received if fired for
cause. Id. He argued that the release was in-
valid for lack of consideration, because he was
already entitled to receive the benefits under
his employment contract. Id. at 1017.
We rejected this argument: “O’Hare gave
up a disputed right to the benefits he would
have received had he been discharged without
cause for an undisputed right to a smaller
package of benefits.” Id. The facts and the
holding of O’Hare are indistinguishable from
this case.
As the district court explained in its second
opinion, “plaintiffs were given a choice: to ac-
cept severance benefits at the time of their ter-
mination and sign a Release, or to wait and
dispute their eligibility under the 1995 plan.
Without exception, plaintiffs chose to take the
severance benefits when offered at the time of
their termination.” They cannot complain now
that the severance package they freely ac-
cepted in lieu of protracted litigation over plan
benefits is inadequate consideration.
C.
Plaintiffs mount one final assault on the re-
leases, namely, that the releases do not con-
form to the Older Workers Benefits Protection
Act (“OWBPA”), 29 U.S.C. § 626(f).
Congress adopted the OWBPA as an
amendment to the Age Discrimination in
Employment Act (“ADEA”), 29 U.S.C. § 621
et seq., to ensure that workers did not
carelessly waive a potential ADEA claim.
Oubre v. Entergy Operations, Inc., 522 U.S.
422, 426-27 (1998). “The OWBPA
implements Congress’ policy via a strict,
unqualified statutory stricture on waivers,” id.
at 427, that requires a release to contain
certain elements, for example, a specific
mention of the ADEA and encouragement to
consult a lawyer, for the release to be valid
against an ADEA claim.
Plaintiffs apparently think the OWBPA
creates a general law of releases for all federal
claims, but they could not be more plainly
wrong. One need only cursorily examine the
text of the OWBPA to see that it applies only
to ADEA claims. The OWBPA states that
“[a]n individual may not waive any right or
claim under this chapter unless the waiver is
knowing and voluntary.” 29 U.S.C. § 626-
(f)(1) (emphasis added). The phrase “this
chapter” in the OWBPA refers to chapter 14
of title 29 of the United States Code, i.e., the
ADEA.
7 The district court granted NationsCredit’s
motion to reconsider precisely because the court
had overlooked O’Hare in its first opinion and
hence had committed a clear error of law under
Fifth Circuit precedent.

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The Supreme Court recognized this
obvious point and the very limited scope of the
OWBPA in Oubre. The Court rejected, in
Oubre, an employer’s argument that the
common law defenses of ratification and
tender back survived the OWBPA. In the
process, the Court repeatedly stated that the
OWBPA applies only to ADEA claims, and no
others.
The Court explained, for example, that
“[t]he text of the OWBPA forecloses the em-
ployer’s defense, notwithstanding how general
contract principles would apply to non-ADEA
claims.” 522 U.S. at 427. Likewise, the Court
expressly conceived a case in which a release
might bar all claims but an ADEA claim be-
cause the release did not comply with the
OWBPA. “[T]hese questions may be complex
where a release is effective as to some claims
but not as to ADEA claims.” Id. at 428.
The Court noted the very limited scope of
the OWBPA in many other passages, as well.8
The language of Oubre precludes plaintiffs’ ar-
gument that the OWBPA applies to a release
of an ERISA claim.
Perhaps even more important than the
language of Oubre is the reasoning behind its
holding. The OWBPA does not mention the
common law defenses of ratification and ten-
der back. The Court concluded, however, that
the OWBPA displaced the common law of re-
leases, including these defenses, as to ADEA
claims. 522 U.S. at 427. The Court anchored
this conclusion in the comprehensive nature of
the OWBPA, which to the Court evinced a
congressional intent for the OWBPA to
displace the common law and to create “its
own regime for assessing the effect of ADEA
waivers, separate and apart from contract
law.” Id.
This reasoning drastically limits the scope
of Oubre. If Oubre extends beyond OWBPA
and ADEA claimsSSand we strongly doubt it
doesSSit extends only to federal statutes with
an equally comprehensive regulation of releas-
es. As we explained in Williams, in which we
held that the OWBPA does not apply to
WARN, the OWBPA “is a change from the
common law, and there is no similar obligation
imposed on employers under WARN.” 23
F.3d at 936. Likewise, ERISA does not reg-
ulate releases at all, so neither the OWBPA
nor Oubre applies to the releases of plaintiffs’
ERISA claims.
V.
The district court held, in its first opinion,
that the ERISA preemption clause, 29 U.S.C.
§ 1144(a), preempts plaintiffs’ state law
claims. The court did not disturb this holding
in its second opinion. Plaintiffs argue that the
court erred, because they cannot be both in-
eligible for plan benefits and have their state
law claims preempted. According to plaintiffs,
if they are ineligible for plan benefits because
the plan expired or was terminated before they
lost their jobs, then the plan no longer exists to
8 See Oubre, 522 U.S. at 426-27 (“The stat-
utory command is clear: An employee ‘may not
waive’ an ADEA claim unless the waiver or release
satisfies the OWBPA’s requirements.”); id. at 427
(“An employee ‘may not waive’ an ADEA claim
unless the employer complies with the statute.”);
id. (“The OWBPA sets up its own regime for
assessing the effect of ADEA waivers, separate
and apart from contract law.”); id. (“The OWBPA
governs the effect under federal law of waivers or
releases on ADEA claims”); id. at 428 (“As a
statutory matter, the release cannot bar her ADEA
suit, irrespective of the validity of the contract as to
other claims.”); id. (“It suffices to hold that the
release cannot bar the ADEA claim”); id. (“The
statute governs the effect of the release on ADEA
claims”).

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preempt their state law claims. NationsCredit,
on the other hand, reasons that even an
expired or terminated ERISA plan retains its
preemptive effect.
We need not reach the question of ERISA
preemption, because we may affirm on much
simpler grounds: The releases bar the state
law claims. The Texas law of releases is sim-
ilar to this court’s standards explained in this
opinion. Under Texas law, “a release must
mention the claim to be effective.” See Keck
v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692,
698 (Tex. 2000). Texas law does not,
however, “require that the parties anticipate
and identify each potential cause of action
relating to the release’s subject matter.” Id.
The releases expressly cover “any claims
based in tort [or] contract . . . [and] includes,
but is not limited to, all claims arising by rea-
son of or in any way connected with your em-
ployment relationship with NCDF.” Plaintiffs’
state law claims sound in tort or contract and
are directly connected to plaintiffs’
employment at NDCF. These claims therefore
fall within the subject matter of the releases,
and thus the releases bar the state law claims
under Texas law.
AFFIRMED.

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